Posts Tagged ‘economic’

Judgment Day

November 30th, 2011

A client asks:

  • “I have a judgment from GE Capital that was issued in 10/2008.  How would I go about getting that removed from my credit?  Yes, it is mine.  Whom would I contact?  The court or the creditor?”

If by “removed” you mean, “make it go away,” the [only*] solution is to pay it.

Escaping Judgment

A judgment is a judicial (court) order establishing that a debt is valid. A judgment creates an automatic lien on any real property you own in the county where it was issued, regardless of when the property was/is purchased. It can be “transcribed” so that it applies in any other county in the state for about $10/county. A judgment is valid initially for 10 years, and is renewable indefinitely each 10 years. A judgment automatically earns interest at the legal rate (currently 8%), or at whatever rate the contract may specify (if it specifies a different rate). Judgments can be “imported” from state to state, but that requires legal work; however, in many cases, the cost of importing it can be added to the judgment, so wherever it goes, it grows and grows.

Judgments (or, rather, the right to collect on them) can be assigned (sold) like any other asset, and their value depends on whether you already own property, what it’s worth, etc. Judgment buyers are not subject to quite the exact same rules as bill collectors.

The only way to remove a judgment is to record a satisfaction, and that must be done by the person who holds the judgment. It is possible to negotiate satisfaction for less than the face value of a judgment.

A credit bureau can report a judgment in good faith as long as it’s still on the records in the county (even if it’s been satisfied) and the county records don’t show that it’s been satisfied (which people sometimes overlook when they pay them off).  If it has been paid, and you demand that the holder record the satisfaction, they are subject to penalties if you can prove payment and they don’t record the satisfaction within a specified time.

This is why, whenever possible, you want to resolve any debt claims before they are reduced to judgments.

I’m going to guess that’s not the answer you were hoping for….

For Every Rule, Exceptions…

*Payment is often the only practical solution to eliminate a judgment. However, it is possible to seek relief from a judgment through the court. This is often impractical for relatively small judgments, as it will involve legal fees and a minor lawsuit. It’s more likely to succeed if you do it promptly, and if there’s a valid argument that it shouldn’t have been issued in the first place. Here, where the debt is/was valid, your chances of success are slim. You can also have judgments modified or avoided in bankruptcy in some cases, but you need to deal with that while the bankruptcy is pending, and there’s no guarantee of success; a bankruptcy expert (I am not one) can provide better insight into your chances of success there.

Money for Nothing?

May 4th, 2010

I received an inquiry from an administrative assistant in a client’s office today, and it was disclaimed with a note saying, “If you’ll charge a fee to answer this question, please ignore this message.”  As I set about explaining how I decide what to charge for, it occurred to me this would make a good “open letter” to clients explaining about how I decide to bill or not bill.  So, with minor modifications, what follows is that letter:

There is information on my web site that explains the various arrangements attorneys make regarding fees.  Though change is afoot, hourly billing is still a very common practice.  When billing hourly, the conscientious attorney must always be mindful to bill only for value delivered.  Because I value the long-term relationship with the client, this is always at the forefront of my mind when tracking time or preparing invoices.  While I certainly expect to be paid for the work I do, I don’t expect money for nothing!

For your information, I try not to charge for “quick questions” and routine correspondence – status updates, etc.  In short, for “conducting business.”  (I may occasionally miss an item, since it’s not always clear when the conversation starts – whether e-mail or phone – where things are headed.  That is why I personally review each invoice before it goes out; I will zero-out trivial interaction whenever it makes sense.)  I try only to charge for “lawyering”:  answering questions that involve analysis; explaining legal concepts, options, or situations; drafting (writing); or extensive research specific to your situation.  (I also charge – but “lightly” whenever possible – for meetings or consultations that relate to strategic planning, assignment/delegation of tasks, management of the calendar, etc.  I try to strike a balance between the importance of those conversations vis-à-vis deadlines, priorities, etc., and the administrative nature of the communication.)

A rule of thumb a colleague uses:  “Charge for anything that could result in a malpractice claim if you’re wrong.”  While I try not to think of it quite exactly that way, there’s something to be said for that point-of-view.

By the same token, I frequently omit logging voice mails or e-mails that are brief and simply informational, so the “dialog” that might seem to be reflected on an invoice is not all-inclusive; there’s a point of diminishing returns where it would take me more time to log the time than I actually spent making a quick note, etc.  I also try to trim down the descriptions and such on the invoice so that it’s not too verbose, and doesn’t disclose confidential information.  While I want it to be clear enough that you understand the “value” or “service” I provided when a fee is charged, it should not be taken as an exhaustive record of our relationship.  I have more notes and detailed call logs in my case management system, should we need to refer back, as well as paper notes I take at meetings, etc.

When in doubt, it’s generally “better to be safe than sorry.”  That being said, because it’s important that your bosses know what’s going on, and the advice I give, most questions that would be billable should come through them, or at least be copied to them when time is of the essence.  My earlier reference regarding not forwarding my correspondence directly to other employees when I resolved a dispute for you was to avoid the number of people posing questions; it can get tricky if too many employees start posing questions, because it can become unclear whose interests I’m looking out for, i.e., “whose side I’m on.”  (We occasionally get into situations where I even have to disclaim to business owners when there’s a conflict between their personal interests and those of the Company, especially where there are multiple owners.)